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Tuesday January 18, 2022



Stitch Fix Posts Earnings

Stitch Fix, Inc. (SFIX) released its second quarter earnings report on Monday, March 8. The San Francisco-based company's stock dropped as much as 30.6% on Tuesday following the release.

The online personal styling subscription service announced revenue of $504.1 million for the second quarter. This was up from $451.8 million reported in the same quarter last year, but below analysts' expectations of $512.2 million.

"In our first two quarters we had more net active client additions than in our entire past fiscal year, and we delivered one of our strongest Januarys on record," said Stitch Fix Founder and CEO Katrina Lake. "This level of demand for our model of personalized discovery and radical convenience positions us well to continue to capture share amidst the ongoing shift in the retail landscape, and gives us confidence in our long-term opportunity."

The company reported a net loss of $21 million or $0.20 per share for the quarter. This was down from net income of $11.4 million or $0.11 per share reported last year at this time.

Stitch Fix added 110,000 active clients during the quarter, growing its active client count to 3.87 million. However, net revenue per active client decreased from $501 at this time last year to $467. Stitch Fix recognizes revenue once unwanted items are received back from a client, rather than when an order is shipped. According to its letter to shareholders, increased demand on common carriers during the pandemic caused shipping delays. This resulted in the inability to recognize revenue for items shipped before the end of the quarter. For the fiscal year, the company lowered its guidance for revenue growth down to 18%-20%.

Stitch Fix, Inc. (SFIX) shares ended at $53.87, down 26% for the week.

Campbell Serves Up Earnings

Campbell Soup Company (CPB) released its second quarter earnings report on Wednesday, March 10. The iconic soup, snack and beverage company's stock fell after the release, despite reporting strong earnings that surpassed analysts' expectations.

Campbell posted quarterly revenue of $2.28 billion, up 5% year-over-year. Revenue was $2.16 billion at this time last year.

"We delivered another quarter of strong results, with top-line growth in both segments - partly tempered by foodservice and supply constraints caused by COVID-19 - as well as continued growth in [earnings before interest and taxes] and [earnings per share]," said Campbell President and CEO Mark Clouse. "In addition, nearly 75% of our brands grew or held share which was an important goal for the quarter."

For the second quarter, Campbell reported earnings of $245 million or $0.84 per share. This is down from $1.21 billion or $0.72 per share reported at the same time last year.

Campbell's guidance for the fiscal year estimates earnings per share of $3.03 to $3.11, representing growth of 3% to 5%. However, the company foresees a drop in sales as customers perform less pantry-stocking than was seen during the pandemic's heights.

Campbell Soup Company (CPB) shares closed at $47.96, up 2% for the week.

Tupperware Disappoints Despite Strong Earnings

Tupperware Brands Corporation (TUP) released its fourth quarter and full-year earnings report on Wednesday, March 10. Despite increased sales and revenue, the Florida-based company's stock fell almost 20% following the release, after earnings failed to meet expectations.

Tupperware posted quarterly sales of $489.6 million, up 17% from $417.2 million reported at the same time last year. Revenue for the year came in at $1.74 billion, down 3% from $1.80 billion reported last year.

"The results reported today show that our efforts to fix the core business are beginning to take hold as our sales force realize geography is no longer a barrier to reach new customers as they grow their business through social media platforms and digital tools," said Tupperware President and CEO Miguel Fernandez. "Additionally, we continue to provide real-time solutions to consumers' needs to prepare food, minimize food waste and decrease use of single-use items."

For the fourth quarter, Tupperware reported net income of $21.8 million or $0.41 per share, up from a loss of $71.7 million reported at this time last year. Net income was $112.2 million for the full year, up from net income of $12.4 million last year.

Despite strong revenue and earnings, Tupperware's stock fell after the release. Analysts had projected earnings per share of over $0.70, while the company delivered earnings per share of $0.41. This was up from a loss of $1.47 per share reported during the same quarter last year. The company generated $197.6 million of free cash flow during the year, up from $137.2 million last year. Tupperware hopes to create $200 million of free cash flow in 2021.

Tupperware Brands Corporation (TUP) shares closed at $24.98, down 21% for the week.

The Dow started the week at 31,512 and closed at 32,779 on 3/12. The S&P 500 started the week at 3,844 and closed at 3,943. The NASDAQ started the week at 12,904 and closed at 13,320.

Treasury Yields Surge

Yields on U.S. Treasurys spiked after President Biden signed the latest stimulus package. The additional announcement that COVID-19 vaccinations will be available for all Americans by May 1 also corresponded with a jump in bond yields.

On Thursday afternoon, President Biden signed a $1.9 trillion stimulus bill, which will send another round of direct payments to many Americans, expand the child tax credit for those within certain income ranges and extend the $300 per week federal addition to state unemployment insurance. The massive spending bill ignited concerns of inflation, causing the NASDAQ to fall as investors returned the safe-haven of bonds, which are once again providing higher rates of return.

"We think the U.S. 10-year yield has further room to go and could reach 1.8%," said Nordea senior macro strategist Sebastien Galy. "Growth stocks maintain a high sensitivity to rates, which continues to suggest that they are quite overvalued."

The 10-year Treasury note opened the week of March 8 at 1.568% and reached as high as 1.633% on Friday. The 30-year Treasury bond opened the week at 2.299% and reached as high as 2.404% on Friday.

President Biden announced on Thursday evening that he will direct states, tribes and territories to lift all eligibility restrictions for vaccinations by May 1. Once all are eligible, the Administration has promised to create more places to get vaccinations such as pharmacies, community health centers and federally-run community vaccination centers. Another goal will be to increase the number of people qualified to administer vaccinations such as dentists, podiatrists and veterinarians.

"If we do this together, by July the Fourth, there's a good chance you, your families and friends will be able to get together in your backyard or in your neighborhood and have a cookout or a barbecue and celebrate Independence Day," said President Biden.

The 10-year Treasury note yield closed at 1.63% on 3/12, while the 30-year Treasury bond yield was 2.40%.

Mortgage Rates Rise

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, March 11. The report showed rates rose from last week.

The 30-year fixed rate mortgage averaged 3.05%, up from 3.02% last week. At this time last year, the 30-year fixed rate mortgage averaged 3.36%.

This week, the 15-year fixed rate mortgage averaged 2.38%, up from 2.34% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.77%.

"As the economy improves given labor market optimism, continued vaccination roll-out and additional stimulus pending, mortgage interest rates increased this week," said Freddie Mac's Chief Economist Sam Khater. "But even as rates rise modestly, the housing market remains healthy on the cusp of spring homebuying season. Homebuyer demand is strong and, for homeowners who have not refinanced but are looking to do so, they have not yet lost the opportunity."

Based on published national averages, the national average savings rate was 0.04% on 3/12. The one-year CD finished at 0.14%.

Published March 12, 2021

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